CPI Misses Despite Rising Energy, Shelter Costs As Used Car Prices Plunge Most In 9 Years

Following yesterday's 'disappointing' miss in producer prices, headline consumer price inflation met expectations at +2.5% YoY - above PPI for the first time since Dec 2016 - as energy and shelter costs surge.

While CPI YoY met expectations, CPI MoM missed, rising just 0.2% (vs +0.3% expectations) after dropping 0.1% MoM in March.

However, Core CPI missed expectations as apparel and used car prices are slumping...

The index for all items less food and energy increased 0.1 percent in April. The index for household furnishings and operations rose 0.5 percent in April, the largest increase since April 2015, and the personal care index increased 0.7 percent.

The apparel index rose 0.3 percent in April after declining in March, and the tobacco index increased 1.3 percent. The medical care index rose 0.1 percent in April, with the hospital services index rising 0.2 percent, the prescription drugs index increasing 0.1 percent, and the physicians' services index unchanged. The indexes for education and for alcoholic beverages also rose in April.

The index for used cars and trucks fell 1.6 percent in April, the largest decline since March 2009.

The recreation index fell 0.4 percent, the largest decline since December 2009. The index for airline fares fell 2.7 percent in April, and the new vehicles index declined 0.5 percent. The index for motor vehicle insurance fell 0.2 percent, the first monthly decline since April 2017. The index for communication also declined 0.2 percent in April.

Bloomberg’s chief U.S. economist Carl Riccadonna wrote in a note today, the tone of the May FOMC statement and subsequent Fedspeak signals a sanguine outlook among officials regarding the prospect of inflation settling near the central bank’s 2% objective over the medium term.

And a closer inspection of the CPI helps to explain why policy makers’ confidence is well placed: The pickup in inflation over the past few months appears to be overstated, and cell phone contracts are largely to blame.

However, Shelter- and Rent-Inflation are picking up again...

  • Shelter Inflation 3.4% Y/Y, vs 3.3% in March

  • Rent Inflation 3.7% Y/Y, vs 3.6% in March  


spastic_colon Thu, 05/10/2018 - 08:46 Permalink

told ya.....what a bunch of total BS

" The medical care index rose 0.1 percent in April, with the hospital services index rising 0.2 percent, the prescription drugs index increasing 0.1 percent, and the physicians' services index unchanged. The
indexes for education and for alcoholic beverages also rose in April."


Endgame Napoleon XBroker1 Fri, 05/11/2018 - 11:30 Permalink

If they have a lot of extra money, that is fine, but most American citizens do not have any extra money for car notes or any other major purchase, including for houses. 

One of Tyler’s other articles hit on the likely explanation for all of these new luxury apartment complexes, driving up rent prices: older, dual-high-earner Boomers, renting out their palaces to Millennials who cannot afford to buy a house. 

The Boomers keep the palace as a store of value, while renting an urban luxury apartment that probably costs more per month than what they are getting in rent for the house in some cases, but that way, they ditch the yard work and the traffic snarls when driving into the city to indulge in restaurant going and other lesser luxuries.

It makes total sense and explains a lot of what you see, albeit I have seen evidence that big groups of young people rent those luxury apartments, too. 

One $10-per-hour job that I interviewed for was in a luxury apartment complex that rented to nothing but groups of very young people. Driving in there, I could not believe that all of those 20-something’s could afford the rent in that place. 

My job would have been to preside over the wild pool parties on the weekends while the momma manager took off for babies. Likely, I would have also done the management job for $10 per hour while she was absentee for many mornings, afternoons and weeks (for babies). 

To get any more than $10 per hour, you had to get between 4 and 5 renters per unit through a credit check. The momma manager explained that it was hard to make much commission. Most of the groups of young people had at least one applicant that did not make the cut. 

But, with a clientele of dual-high-earner Boomers at or near retirement age, momma managers and their $10-per-hour employees would not have that problem. Since the Boomers are the biggest generation after Millennials, that would explain the demand for those luxury apartments.

As a single, childless person—with no spousal income and no free rent, free groceries and up to $6,431 in refundable child tax credit money for reproducing while single—I could never have afforded a crappy, one-room apartment in a dangerous area of the city on that pay.


In reply to by XBroker1

Endgame Napoleon poland spring Fri, 05/11/2018 - 11:39 Permalink

I thought the boxier cars were the most visually appealing, like the Volvos of the Eighties, although exaggerated curves also have their place. The VW Beatles from the Sixties are classic. Cars today fail to incorporate humor in the designs, and, except for people with big families or people who have to haul things around for work, they are too big. 

In reply to by poland spring

Endgame Napoleon jim942 Fri, 05/11/2018 - 11:45 Permalink

The BLS is helping them to undercut 80% of the citizenry through fake employment numbers. Their numbers do not count the 95 million working-age citizens out of the workforce and the mammoth number of underemployed citizens, but do count every illegal alien on welfare due to US-born kids who is working part-time in a single-earner household that keeps him under the income limits for welfare. They count him as “employed,” assuming he is not working under the table.

In reply to by jim942

Fiat Burner Thu, 05/10/2018 - 08:49 Permalink

Statistics from the government about the standard of living....yeah like I'm going to believe that.


In any case, the Fed is way behind the curve in raising rates.

Quivering Lip Thu, 05/10/2018 - 08:52 Permalink

Used car prices in CPI is a fucking joke. How many times a decade does one buy a car?

How bout my health insurance premiums up 85% in the last 5 years with a 30% jump last year alone.

silverer Thu, 05/10/2018 - 08:54 Permalink

It's a good thing Ford and the other majors will be offering big, heavy, over-equipped trucks for folks to carry their two or three bags of groceries. That'll cost you $50 grand, ma'am. Enjoy it even more when oil prices finally rise as war and incompetence such as in Venezuela takes more oil offline. Remember when everyone ditched trucks and moved to sedans? Oops. Ready for a repeat? Except the American companies won't be building sedans. Oops again.

GunnerySgtHartman silverer Thu, 05/10/2018 - 09:23 Permalink

Sir, have you forgotten that most mainstream vehicles, even those from the Big Three, don't cost $50k?

Or that Ford's announcement regarding its sedans will take place over a three-year timeframe?  It won't be immediate.

What of the effect of shale oil?  We didn't have shale oil in any appreciable volume in 2008.  Do you think that the shale oil producers will simply sit on their hands as oil prices go up?

What proof is there that if gas does go to $4/gallon, people will flock to tiny tin-can sedans again?  Crossovers get fuel economy nearly as good as sedans now.  Sure, some people will run out and spend thousands of dollars on a new small sedan to save a few dollars on gas, but they are the foolish ones.

In reply to by silverer

PitBullsRule Thu, 05/10/2018 - 09:36 Permalink

Here's a news flash, used cars ALWAYS drop in price. This is because they were pieces of shit when they were new, and when they are used, they become bigger pieces of shit.

XBroker1 Thu, 05/10/2018 - 09:55 Permalink

Considering the cars people are currently driving are 'used', there probably exists a negative net equity in the car in half the cases.

We could probably live just fine for a thousand years just using the cars and trucks and parts on the flat earth plane today, and not build anymore. But we would have to actually speak to one and other to accomplish that... So, not going to happen. lol